Sh. Qazi Nacir Ahmed, Srinagar V. The Income Tax Officer, Srinagar

ITA 636/ASR/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5707 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-03-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 16-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV K GUBGOTRA
• Assessee Lawyers: M A MIR COST ACCOUNTANT
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 636/(ASR)/2016 AS SESSMENT YEAR: 2012-13 QAZI NAZIR AHMAD, 10, JEELANABAD, PEERBAGH, SRINAGAR. [PAN: AASPA 5283H] VS. INCOME TAX OFFICER WARD-3 (2), SRINAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. M. A. MIR (COST ACCO UNTANT) RESPONDENT BY: SH. RAJEEV K. GUBGOTRA (D.R.) DATE OF HEARING: 19.03.2018 DATE OF PRONOUNCEMENT: 27.03.2018 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE CON FIRMATION OF HIS ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) DATED 11.03.2015 FOR ASSESSMENT YEAR (AY) 2012-13 BY THE COMMISSIONER OF INCOME TAX (APPEALS), JAMMU ('CIT(A)', FOR SHORT) VIDE HIS ORDER U/S. 250(6) DATED 20.07.2016. 2. THE APPEAL RAISES TWO ISSUES PER ITS TWO GROUNDS , OF WHICH THE SECOND (GROUND 2) WAS NOT PRESSED BY THE LD. AUTHORIZED RE PRESENTATIVE (AR), THE ASSESSEES COUNSEL, DURING HEARING, MAKING AN ENDOR SEMENT TO THAT EFFECT ON THE APPEAL MEMO ITSELF. THE SAME (GROUND 2) IS ACCORDIN GLY DISMISSED AS NOT PRESSED. ITA NO. 636 (ASR)/2016(AY 2012-13) QAZI NAZIR AHMAD V. ITO 2 3. THE ONLY SURVIVING ISSUE IS THUS IN RESPECT OF G ROUND 1, I.E., AN ADDITION FOR UNEXPLAINED STOCK OF RS.61.37 LACS. THE ASSESSEE-IN DIVIDUAL WAS DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOUND TO HAVE DISCLOSED, PER HIS OPERATING STATEMENT (TRADING, PROFIT AND LOSS ACCOUNT), AN OPENING STOC K OF RS.62,24,270, AS AGAINST A CLOSING STOCK OF RS.87,757 AS AT THE END OF THE IMM EDIATELY PRECEDING YEAR. THAT IS, HAD DISCLOSED AN EXCESS STOCK OF RS.61,36,513 WITHO UT HIS ACCOUNTS EXHIBITING THE SOURCE THEREOF. THE ASSESSEES EXPLANATION WAS THAT THIS WAS SO AS THE SAID STOCK, BEING OF GUNNY BAGS, WAS TAKEN DIRECTLY TO THE BALA NCE SHEET AS ON 31.03.2011 (PB PG. 55), SO THAT THE STOCK TO THAT EXTENT ALREADY O BTAINED IN HIS ACCOUNT, AS ON 31.03.2011, AND THERE WAS NO ADDITIONAL STOCK REPOR TED AS ON 01.04.2011. FURTHER, THIS WAS SO DONE AS THERE WAS NO PURCHASE AND SALE OF GUNNY BAGS DURING THAT YEAR (F.Y. 2010-11), FURNISHING ALONG WITH THE TRADING A ND PROFIT AND LOSS ACCOUNT OF THE BAGS DIVISION EXHIBITING THIS (PB PG. 54), AS WELL AS THE BALANCE-SHEET (AS ON 31.03.2011) OF THE SAID DIVISION REFLECTING THE SAI D STOCK (PB PG. 56). THE SAME, HOWEVER, DID NOT FIND FAVOUR WITH THE REVENUE, WHIC H REGARDED THE SAID EXPLANATION TO BE AN AFTERTHOUGHT. THE ASSESSEE HAD CLEARLY PURCHASED STOCK OUTSIDE BOOKS, AND WHICH WAS SOUGHT TO BE INTRODUCE D IN BOOKS OF ACCOUNT BY WAY OF OPENING STOCK. THE ADDITION HAVING BEEN CONFIRME D THUS IN FIRST APPEAL, THE ASSESSEE IS IN SECOND APPEAL. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE ADDITION, IN OUR CONSIDERED VIEW, AND EVEN AS EXPRESSED BY THE BENCH DURING HEARING, IS WHOLLY MISPLACED, AND ARISES DUE TO THE NON-APPRECIATION OF, OR, RATHER, THE NON-WILLINGNESS TO APPRECIATE, THE FACT S OF THE CASE. THOUGH WE MAY HASTEN TO ADD THAT THE ASSESSEE HIMSELF IS TO A LAR GE EXTENT RESPONSIBLE FOR THE SAME IN-AS-MUCH AS HE DID NOT PRODUCE HIS ACCOUNT BOOKS DURING THE ASSESSMENT PROCEEDINGS OR EVEN AT THE FIRST APPELLATE STAGE. A NY DOUBT OR QUERY THAT OBTAINED IN ITA NO. 636 (ASR)/2016(AY 2012-13) QAZI NAZIR AHMAD V. ITO 3 THE MATTER COULD BE RESOLVED WITH REFERENCE THERETO IN-AS-MUCH AS THE ASSESSEES CASE QUA THE NATURE AND SOURCE OF THE STOCK OF RS.61.37 LAC S WITH HIM AS ON 01.04.2011, IS THAT THE SAME IS OF GUNNY BAGS, AVAI LABLE WITH HIM AND, FURTHER, FINDS REFLECTION IN HIS AUDITED ACCOUNTS, AS ON 31. 03.2011. THE ASSESSEE HAS THREE BUSINESS, VIZ. (TRADING IN) KASHMIRI HANDICRAFTS; GAS AGENCY; AND (TRADING IN) GUNNY BAGS. WHEN THERE IS NO PURCHASE AND SALE OF ANY TRADING ITEM DURING A YEAR (PERIOD), NON-REFLECTION OF ITS STOCK AS AT THE BEGINNING AND THE END OF THE YEAR (PERIOD), I.E., BY WAY OF O PENING AND CLOSING STOCK RESPECTIVELY, IN THE OPERATING STATEMENT, WOULD NOT IMPACT THE TRADING PROFIT OR LOSS FOR THE YEAR (ACCOUNT PERIOD) AT ALL - THE OPENING AND CLOSING STOCK (AT THE SAME VALUE), BEING ON THE DEBIT AND CREDIT SIDE RESPECTI VELY OF THE TRADING ACCOUNT (OPERATING STATEMENT), CANCELLING EACH OTHER. THE LD. AR WAS DURING HEARING REQUIRED BY THE BENCH TO EXHIBIT THE STOCK (OF GUNNY BAGS) WITH THE ASSESSEE AS ON 31.03.2011 WITH REFERENCE TO THE AUDITED FINAL ACCOUNTS (FOR F.Y. 2010-11), AND WHICH HE DID. THE TRADING, PROFIT AND LOSS ACCOUNT AS WELL AS THE BALANCE-SHEET - BOTH UNIT-WISE AND C ONSOLIDATED, BOTH FOR F.Y. 2010- 11 AND F.Y. 2011-12 (CORRESPONDING TO AYS. 2011-12 AND 2012-13 RESPECTIVELY), WERE MATCHED BY US FOR INTERNAL CONSISTENCY, AND FO UND TO BE SO. IN FACT, THE BALANCE-SHEETS AS ON 31.03.2011 AND 31.03.2012 WERE ALSO MATCHED AND FOUND TO BE IN AGREEMENT WITH THE UPLOADED RETURNS FOR THE R ELEVANT YEARS, COPIES OF WHICH ARE ALSO ON RECORD. IT IS ONLY THE MANNER OF ITS PR ESENTATION, HAVING BEEN TAKEN DIRECTLY TO THE BALANCE-SHEET (AS ON 31.03.2011), R ATHER THAN BEING ROUTED THROUGH THE OPERATING STATEMENT (WHICH IS ONLY AN ACCOUNT S TATEMENT) AND, FURTHER, DUE TO THE NON-IMPACT ON THE OPERATING INCOME ON ACCOUNT O F NO BUSINESS (BY WAY OF PURCHASE AND SALE), THAT PERHAPS CAUSED THE MISUNDE RSTANDING, LEADING TO THE IMPUGNED ADDITION. ITA NO. 636 (ASR)/2016(AY 2012-13) QAZI NAZIR AHMAD V. ITO 4 IF AN ADDITIONAL STOCK STANDS REFLECTED IN ACCOUNT S DURING THE YEAR IN THE GUISE OF OPENING STOCK (AS ON 01.04.2011), AS ALLEG ED, THERE SHOULD BE A CORRESPONDING CREDIT ENTRY FOR THE SAME IN ACCOUNTS , I.E., EITHER BY WAY OF BILL/S PAYABLE; AGAIN EXPLAINING ITS SOURCE, OR, IN ITS AB SENCE, AN ADDITION TO THE CAPITAL ACCOUNT, I.E., AS PER BOOKS. THE OPENING CAPITAL AS ON 01.04.2011 (PB PG. 34, BEING THE BALANCE-SHEET AS ON 31.03.2012), IS AT THE SAME SUM (RS.104.00 LACS) AS THE CLOSING CAPITAL AS ON 31.03.2011 (PB PG. 55). NO IN FERENCE OF PURCHASE OUTSIDE BOOKS, OR OF THE STOCK AS ON 01.04.2011 BEING UNACC OUNTED OR UNEXPLAINED TO ANY EXTENT, THUS, ARISES. IT IS, IN FACT, ALL OF THE FO REGOING THAT INFORMS OUR FINDING, ISSUED AT THE BEGINNING OF THE DISCUSSION, OF THE I MPUGNED ADDITION QUA UNEXPLAINED/UNACCOUNTED STOCK (FOR RS.61.37 LACS) A S BEING WHOLLY UNFOUNDED/ MISPLACED. WE DECIDE ACCORDINGLY, ALLOWING THE ASSESSEES GRO UND 1. 5. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 27, 201 8 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 27.03.2018. /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: SH. QAZI NAZIR AHMAD, 10, JE ELANABAD, PEERBAGH, SRINAGAR (2) THE RESPONDENT: ITO WARD-3(2), SRINAGAR (3) THE CIT(A), JAMMU (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T TRUE COPY BY ORDER